The U.S. Treasury sell-off is so ferocious: is it a prelude to economic collapse?

The number of new jobs in the United States for September will be revealed on Friday, and the market expects 170,000, slightly lower than the previous month's 187,000. For the Fed, this data and next week's inflation data will be key to determining monetary policy. However, different data may have different effects, and if job creation is higher than expected, it may trigger a sell-off in the bond market; And if inflation data is higher than expected, it could prompt the Fed to raise interest rates faster. Looking at current market conditions, while futures traders are betting on a probability of a Fed rate hike in November of less than 22%, long-term Treasury yields have updated their all-time highs, meaning the economy could tip into recession due to high interest rates. In this case, the Fed's case for raising interest rates may weaken, so it is necessary to pay close attention to market changes. Rising U.S. bond yields could trigger the risk of economic collapse and financial market crashes. Therefore, we need to be cautious about future market changes and think about how to avoid the impact of aggressive rate hike cycles on the economy. What do you think should be done to assuage market concerns and boost the economy? Goldman Sachs economists estimate that the U.S. economy could be affected by higher borrowing costs, and GDP growth could be reduced by 1 percentage point in the coming year.

If the recent rise in borrowing costs continues, it will weigh on the U.S. stock market, mortgage rates and the direction of the dollar, potentially leading to weaker investment, hiring and economic activity. In addition, the recent rapid rise in U.S. Treasury yields has also increased the risk of a financial market crash. If this continues, the U.S. and global economies could slow down significantly next year. Consumption remains strong after the Fed's sharp rate hikes, confusing investors. If it is because the neutral rate is higher, the Fed will keep the rate higher for longer, thus justifying the recent rise in long-end Treasury yields. If it is because the traditional lag of monetary policy has not yet had time to play a role, then the slowdown may only be a matter of time. Friday's strong September non-farm payrolls could underscore the resilience of the economy, exacerbating the rout in the bond market and continuing to push yields higher. But signs of economic weakness may also prevent Treasury yields from rising further. Mester, president of the Cleveland Fed, said on Tuesday that the Fed must pay attention to rising borrowing costs and that higher Treasury yields will have an impact on the economy, which must be taken into account when setting monetary policy.

This is contrary to the logic of the rise in long-term bond yields last year, when the market expected the Fed to tighten policy and pushed up short-term bond yields, and investors worried about inflation and demanded higher compensation for holding long bonds. Now, rising borrowing costs have spilled over into the U.S. stock market, mortgage rates, the U.S. dollar and more, potentially weighing on stock and other asset prices, leading to weak investment, hiring and economic activity. In short, the U.S. economy is likely to be affected by higher borrowing costs, and GDP growth could be reduced by 1 percentage point in the coming year. If the recent rise in borrowing costs continues, the U.S. and global economies could slow sharply next year. Investors need to keep a close eye on the bond market, especially Friday's non-farm payrolls data, as well as the Fed's monetary policy adjustment. How to balance borrowing costs and economic development is an issue worth exploring, and we look forward to readers' comments and suggestions. Topic: Confidence in a soft landing of the US economy shakes, and the sell-off in the bond market will force the Fed to reconsider its balance sheet reduction policy? Confidence in a soft landing in the U.S. economy is shaken, and a sell-off in the bond market will force the Fed to reconsider its balance sheet reduction policy.

Mohamed El-Erian, an adviser at Allianz Insurance Group and dean of Queens College at Cambridge University, pointed out in an op-ed that the market has begun to internalize the trend of "interest rates remaining high for longer", while the Fed has not yet realized the fundamental change in the economic paradigm, making a soft landing out of reach. With economic conditions so uncertain, economists' forecasts and analysis of the future have become more complex. Tight factors such as higher interest rates, higher oil prices, a stronger dollar, and a disorderly rise in U.S. Treasury yields have made the prospects for a soft landing increasingly cloudy. And this makes people uncertain about the future development of the United States. The changes in the U.S. economy reflect a broader trend toward a world where supply-side flexibility has been greatly reduced over the years. This trend is likely to continue in the coming years, with varying degrees of impact on the global economy. The Fed needs to quickly adapt to changes in the economic paradigm and adjust its forward guidance, monetary policy framework, and the way officials communicate appropriate inflation targets to markets. A sell-off in the bond market could force the Fed to reconsider its balance sheet reduction policy, which would pose significant risks to economic well-being. Barclays analysts said this week that the global bond market is destined to continue to fall.

Bruce Kasman, chief economist at JPMorgan, also believes that the bond market sell-off will have a devastating impact on the economy, which is very worrying. In short, confidence in a soft landing in the US economy is shaken, and the bond market sell-off will force the Fed to reconsider its balance sheet reduction policy. We need to pay more vigilant attention to this trend, and hope that the Fed can better grasp the opportunities of economic changes and formulate a more scientific monetary policy. So, what do you think about this issue? Welcome to share your thoughts with us in the comment area. The Fed has suffered a "bond sell-off" crisis, long-term interest rates are rising, consumer and corporate borrowing costs have risen sharply, and headwinds such as the resumption of student loan payments and the strike of auto workers have turned a "soft landing" into a luxury. How can this crisis be resolved? A former Fed staff member believes that the possibility of another rate hike this year should be ruled out first, and if this step does not work, it will also need to show that it is open to weakening quantitative tightening in order to ease the crisis. The cause of this crisis is not single, on the one hand, because the yield on the US 10-year inflation-protected bond (TIPS) reached a two-decade high, and on the other hand, because the Fed's quantitative tightening is also one of the factors driving up the yield of long-term bonds.

In this case, investors' expectations also changed, and they expected that the negative correlation between stocks and bonds would return as the Fed's rate hike drew to a close, but in fact this did not happen. In response, a former New York Fed executive argued that such crises tend to develop on their own until they correct themselves through more sinister mechanisms such as weak economic data or financial stability scares. Therefore, the Fed needs to take more aggressive measures to mitigate this crisis, how to solve this problem? Please leave a comment to discuss. Topic: Stock Market Analysis: The return to the earnings inflection point marks a period of turmoil in the stock market, which has made investors feel anxious. But as the market gradually returns to rationality, some positive signals are emerging. First, we can see some large businesses starting to recover earnings. This shows that the market is gradually moving in a better direction. Second, some stocks are starting to show signs of a rebound, which means that investors' confidence in the market is gradually growing. While these signals may seem positive, we cannot ignore the problems in reality. After all, we have not yet reached the inflection point of the downward trend in return yields. However, these signs indicate that the market is gradually moving in this direction.

Investors should remain vigilant while also seeing opportunities in the market. Strategically choosing the right stock investment will help to achieve better returns. In conclusion, while there is still some uncertainty in the market, we should see that the market is gradually moving in a positive direction. Choosing the right investment strategy to ensure that you get better returns in the market is something we need to focus on. What opportunities do you see in the market? Welcome to share your views in the comment section.